Squire Sanders knocks at Watson Farley's door

Squire Sanders & Demp-sey has reopened negotiations with former UK merger beau Watson Farley & Williams and is about to agree a tie-up with Paris technology firm Kahn & Associés.

Squire Sanders and Watson Farley have returned to the table for a second round of discussions, which could lead to a merger.

The Lawyer understands that Squire Sanders chairman R Thomas Stanton is also due to visit Europe at the beginning of December to complete the deal with 40-lawyer Kahn.

A senior source close to Squire Sanders said that although the Kahn tie-up is "95 per cent complete", the Watson Farley discussions are "still at a very confidential stage".

Watson Farley managing partner Michael Greville denied that any merger talks were taking place, adding that his firm and Squire Sanders "exchange greetings from time to time". But according to the source, Watson Farley is the only UK firm that Squire Sanders is talking to.

Squire Sanders and Watson Farley first talked last year, before the UK firm began its abortive merger discussions with Simmons & Simmons in January.

The Lawyer understands that Watson Farley reopened discussions with Squire Sanders after a group of Simmons corporate partners opposed the merger.

According to a source close to Watson Farley, the Simmons discussions were an unexpected departure from the US merger strategy that Watson Farley has been pursuing for over two years.

In 2000, Watson Farley held talks with what was Mayer Brown & Platt, before the Chicago firm completed its merger with City-based Rowe & Maw in February this year.

Watson Farley then progressed to long and detailed discussions with US firm Hunton & Williams, but according to the source close to Watson Farley, these broke off because the UK partners feared being swallowed up.

Watson Farley recorded average profits per equity partner of £348,000 last year, while according to The American Lawyer, Squire Sanders posted profits of $435,000 (£275,500) for the 2001-02 tax year.

But according to sources close to both firms, there is more financial parity than it would seem. Squire Sanders does its accounts on a cash basis, while Watson Farley uses an accruals method, adding work in progress into the mix.

"The Hunton & Williams talks broke down because the Watson Farley partners were scared of being swallowed up. With Squire Sanders, they always felt more secure," the source close to Watson Farley explained.

Squire Sanders was unavailable to comment at the time of going to press.